Yesterday, SSENSE, the Montreal-based online fashion retailer that had become one of Canada’s most celebrated tech success stories, filed for bankruptcy protection. The company that once hosted collaborations with Prada and boasted over 100 million monthly page views now has just 45 days to restructure its operations or find new investment to keep its digital doors open.
Founded in 2003 by three Atallah brothers, SSENSE grew from a basement boutique into a global e-commerce phenomenon valued at $5 billion in 2021 after a minority investment from Sequoia Capital. Yet the company that successfully weathered the 2008 financial crisis now finds itself crushed under what court documents describe as “liquidity issues” and “rapid cash burn.”
“What we’re seeing with SSENSE mirrors the broader correction in the tech-enabled retail space,” says Joanne McNeish, associate professor of marketing at Toronto Metropolitan University. “Companies that saw explosive growth during the pandemic are now facing a completely different consumer landscape.”
Court filings reveal SSENSE owes approximately $150 million to creditors, including significant amounts to luxury brands like Saint Laurent, Gucci, and Balenciaga. The company has secured $20 million in interim financing to maintain operations during this restructuring period, but industry experts view this as merely buying time.
The fall appears remarkably sudden for a company that had become Canada’s answer to Farfetch and Net-a-Porter in the luxury e-commerce space. SSENSE distinguished itself through its distinctive editorial voice, experimental retail concepts, and a particularly strong connection with younger luxury consumers interested in streetwear and avant-garde fashion.
According to data from Statista, the global luxury goods market contracted by 3.5% last year, with online luxury sales specifically declining by nearly 5% after years of double-digit growth. This industry-wide pressure has claimed other victims – Farfetch, a direct competitor to SSENSE, was recently acquired by South Korean e-commerce giant Coupang after its share price collapsed.
“The luxury market is experiencing what I’d call a multi-factor storm,” explains Anita Balakrishnan, technology reporter at The Canadian Press. “Inflation has squeezed middle-class consumers who were occasionally splurging on luxury, while even wealthy shoppers are becoming more discerning about their spending.”
Former employees, speaking on condition of anonymity, describe a company that expanded rapidly in recent years, increasing its workforce from approximately 500 in 2019 to over 1,000 by 2022. This growth included significant investments in content production, technology, and office space – creating substantial fixed costs just as the market began to contract.
“They were operating on the assumption that the pandemic-era boom in online shopping represented a permanent shift in consumer behavior,” says one former marketing employee. “When foot traffic returned to physical retail and consumer preferences shifted, they didn’t pivot quickly enough.”
The bankruptcy protection filing comes during a particularly challenging period for Canadian retail. Statistics Canada reported retail sales declined 0.3% in March 2024, marking the third monthly decrease in four months. Online sales specifically have shown volatility, with consumers increasingly returning to in-store experiences.
For Canada’s tech ecosystem, SSENSE’s struggles represent a concerning signal. The company was frequently highlighted as evidence that Canada could produce globally competitive e-commerce platforms beyond Shopify. Its success had attracted significant attention from international investors looking at the Canadian market.
“This is a particularly painful development for Montreal’s tech scene,” notes Gabriel Woo, venture partner at Real Ventures. “SSENSE was a flagship example of combining cultural relevance with technological innovation – something Montreal has been cultivating as a competitive advantage.”
The company’s immediate future remains uncertain. Under the Companies’ Creditors Arrangement Act (CCAA), SSENSE will continue operations while developing a restructuring plan. Options may include finding new investors, selling the business, or significantly downsizing operations to reach profitability.
Industry observers suggest several factors contributed to SSENSE’s current predicament. The luxury retail landscape has become increasingly competitive, with traditional luxury conglomerates like LVMH and Kering investing heavily in their own direct-to-consumer digital channels. Meanwhile, TikTok and Instagram have fragmented the discovery process that once drove traffic to platforms like SSENSE.
Additionally, the company’s inventory-heavy business model differs from marketplace approaches used by competitors, creating higher working capital requirements and increasing risk during downturns.
“The fundamental challenge for luxury e-commerce players is balancing growth with profitability,” explains McNeish. “Many of these companies operated under venture capital models that prioritized market share over sustainable economics. That approach works until suddenly it doesn’t.”
For now, SSENSE’s 34 million annual visitors can still shop on the site, though uncertainty looms over inventory availability and the fulfillment of existing orders. Court documents indicate the company intends to honor customer deposits and continue processing returns during the restructuring period.
As Canada’s retail landscape continues evolving, SSENSE’s struggles highlight the volatile intersection of luxury, technology, and changing consumer behaviors. Whether this represents a momentary stumble or a more fundamental shift in how Canadians access high-end fashion remains to be seen.
What’s certain is that the path forward for one of Montreal’s most celebrated entrepreneurial success stories has suddenly become much more complicated.
